2 October 2020
On 1 October 2020, the new amended LCIA Arbitration Rules came into effect. They apply to all LCIA arbitration proceedings started on or after 1 October 2020.
Driving time efficiency, cost savings, and recognising the need for sustainability, the new rules introduce changes which deliver a more modern, technology focussed approach to dispute resolution.
Here's a round-up of the key information you need to know:
Responding to the coronavirus pandemic, changes in working behaviours, and the need for greater sustainability, the 2020 LCIA Arbitration Rules incorporate new technologies into the arbitral process.
First, let's look at document submission. The new default format for parties to submit a Request for Arbitration and a Response is "in electronic form, either by email or other electronic means including via any electronic filing system operated by the LCIA. Prior written approval should be sought from the Registrar, acting on behalf of the LCIA Court, to submit the Request or the Response by any alternative method". So electronic submission of documents optional is no longer optional – it's mandatory.
Remote hearings are now recognised, as well. This is highly practical development, as it means that parties no longer need to congregate in a single location, at significant cost and (under the current circumstances) risk. The new rules explicitly recognise that hearings can "take place in person, or virtually by conference call, videoconference or using other communications technology with participants in one or more geographical places (or in a combined form)". Efficiency lies at the heart of these changes; the LCIA Arbitration Rules expressly confer on tribunals authority to employ "technology to enhance the efficiency and expeditious conduct of the arbitration (including any hearing)".
Then there's the award signatures process. The new rules acknowledge the impracticality of getting awards physically signed by arbitrators, often located different parts of the world. Now, "any award may be signed electronically and/or in counterparts and assembled into a single instrument" and will generally be transmitted to the parties by the LCIA by any electronic means. Parties should therefore receive awards faster, and the overall impact will be a smoother, more streamlined and more modern delivery of outcome.
What this emphasis on technology means in practice is that you can expect disputes to be resolved in a much shorter timeframe, on a more sustainable basis, and at a lower cost.
The second notable change to the LCIA Arbitration Rules is the introduction of an early determination procedure. Once again, the benefit for you here is greater efficiency. A party can no longer hijack proceedings – not to mention waste your time and money – by advancing unmeritorious claims. The new rules expressly empower a Tribunal to "determine that any claim, defence, counterclaim, cross-claim, defence to counterclaim or defence to cross-claim is manifestly outside the jurisdiction of the Arbitral Tribunal, or is inadmissible or manifestly without merit; and where appropriate to issue an order or award to that effect (an 'Early Determination')."
It remains to be seen how Arbitral Tribunals will interpret the “manifestly without merit” standard, but the principle is sound: to save time and cost if claims cannot sensibly be advanced.
Starting multiple claims arising out of multiple contracts has been a problem under the previous LCIA Arbitration Rules ever since the English 2017 case, A v B. However, it's inefficient to force users into issuing multiple claims when dealing with the same parties or the same facts.
Reflecting a more modern approach, the new rules expressly permit claimants to issue a composite Request for Arbitration over multi-contract disputes. In another nod to practicality, they also recognise that where parties have concurrent disputes then they can (and arguably should) be dealt with on a concurrent basis, even if those proceedings are not formally consolidated.
Data protection and adherence with regulatory obligations are topics which have vexed arbitration practitioners and users for some time.
Regarding data protection, how do you protect data when operating internationally in the resolution of cross-border disputes? The new LCIA Arbitration Rules introduce an express provision on data protection, stressing the need for compliance by participants – parties, arbitrators, counsel, the LCIA itself or others – with any applicable data protection legislation.
The Arbitral Tribunal now has powers to adopt "any specific information security measures to protect the physical and electronic information shared in the arbitration" and "any means to address the processing of personal data produced or exchanged in the arbitration in light of applicable data protection or equivalent legislation" and has the power to issue respective directions.
There are also other regulatory concerns which have previously affected practitioners and users alike; namely, how were we supposed to ensure compliance with sanctions and other economic crime legislation (eg those relating to money laundering)? The new rules address this by building a framework to cope with the challenging international regulatory environment.
Specifically, a newly inserted Compliance Article enables the LCIA to refuse to deal with a party engaged in any prohibited activity and to disclose any information and documents in this context to courts, law enforcement agencies or regulatory authorities. While the obligations arising out of data protection laws, economic sanctions and other regulatory regimes are applicable regardless of the newly inserted provisions, we think their explicit acknowledgment in the new rules is a worthwhile addition.
Finally, the new LCIA Arbitration Rules address another issue which has historically concerned practitioners – what law governs the arbitration clause? This is a question of practical importance because it has a direct impact on the rights and procedure which the rules are there to provide.
The new rules now specifically provide that they are to be interpreted in accordance with the laws of England. How does this help? It ensures consistency of interpretation and means there's a uniform understanding of how the rules should be applied. As with the other changes, we expect this to be a welcome change for practitioners and users alike that helps deliver a more predictable, reliable and efficient dispute resolution service.
For further information on the LCIA Arbitration Rules, please visit our Arbitration Toolbox, which provides an overview of key features of the most popular arbitral institutions that should be considered before drafting an arbitration clause.